Is Your Visa a Hindrance to Get a Mortgage?

List of processing times for visa and citizenship applications published by DIBP

Certain Australian visa types which were previously acceptable by a number of lenders across the country are now being rejected flat out. While it is still possible to apply for a loan at higher loan amounts with certain visa types, you would need to show a pretty strong case to the lender that would give you a chance.

21 February 2017, Sydney, AustraliaTemporary residents who are residing in Australia are experiencing the pain from the strict policies of mortgage lending for foreigners.
At the start, banks had only just stopped lending to foreign citizens who live overseas wanting to make investments in Australia.

However, a number of banks are asking for temporary residents to deposit larger sums of money, even those who are on 457 visas usually staying for longer periods of time here.
As a temporary Australian resident, where do you stand?

Some visa types are restricted from lending

Up until 2016, almost all of the temporary visa types are given the chance to borrow up to 95 per cent of the property value, as well as get the same interest rates that an Australian citizen gets.

The spousal or partner visas is the most preferred visa type among lenders, otherwise known as the Subclass 309 / 100 and 820 / 801 visa.

The bank is going to see you as a permanent resident, or a PR, as long as you are married to a citizen of Australia, and you were both co-borrowers.

This was closely followed by citizens of New Zealand living Down Under.

The ‘Temporary Business (Long Stay) – Standard Business Sponsorship,’ or the Subclass 457 visa, is another bank favorite.

The reason behind this is because the 457 visa holders were skilled workers and were very likely to eventually be permanent residents in Australia.

But even if migrants who are on partner visas and New Zealand citizens are generally still seen and treated as Australian citizens, there are some lenders that have already pulled the reigns when it comes to lending to 457 visa holders as well as other types of visas.

There is one exception however, and that is if you still have at least a year remaining on your visa, then that would mean you have most of your savings in the country and you are currently in a stable employment.

So how much will you be able to borrow now?

Loan to Value Ratios, or LVRs, is the borrowing power given to temporary residents. Unfortunately, this has been reduced to around 60 to 70 per cent of the property value.

For example. For a home in Sydney valued at $500,000, what used to be the deposit you would only have needed to make was 5 per cent of the property value or $25,000. Now, shockingly enough, you are going to need as much as $150,000 to $200,000.

This does not include the other costs related to purchasing a property. This includes fees such as mortgage application fees, conveyancing and legal costs, as well as Lenders

Mortgage Insurance (LMI), and stamp duty.

Some lenders will still permit for you to borrow up to 80 to 90 per cent of the property value if you have a solid stable job and have a good financial disposition.

Right now, the only way an individual can borrow up to 95 per cent or more of the property value is if you wait until you become a permanent resident, if you are on a spousal visa, or

if you are a citizen of New Zealand reisiding Down Under.

But what about if you are on a student visa?

It can be pretty hard to get approved for a mortgage if you have an international student visa, and if you are not employed at all, the only thing left to do would be to purchase a joint property in your parents’ name.

Assuming that both your mom and dad are citizens of a foreign country, then this is going to be assessed as an overseas property investor loan. This means that the bank is going to keep the borrowing power to only 70 per cent of the property value.

It’s a totally different scenario however, if you are a student who is employed and earning enough income in a stable job, as you may be given permission to borrow up to 80 per cent of the property value all in your name.

Is there any way you can maximise your borrowing power?

Yes there is, and the best way your borrowing power can be improved is to save up for a good deposit. Apart from that, you should also consider talking to a mortgage broker who is an expert in dealing with temporary resident cases so navigating through a very vast field of complicated lending policies can become a whole lot easier.

You need to build a strong case with a lender, so you can be provided with more flexible lending options. This is the key to borrowing more. Arming yourself with knowledge is a whole lot better than winging it and then getting declined in the end.